On 2nd January 2024, the Pensions and Lifetime Savings Association (PLSA) issued updated guidance regarding pension sharing orders. This revision emphasises the significance of addressing pensions during divorce proceedings, sparking more discussions about the role of pension sharing.

Managing Director, Ffion Thomas, explained why having an open dialogue in divorce proceedings around pensions is vital.
Importance of Pensions in Divorce:
Pensions are often overlooked in divorce conversations due to their perceived complexity and stress-inducing nature.
Couples often prioritise physical assets like property during divorce, overlooking the crucial role of pensions.
Including pensions in discussions can alleviate stress in the long term as they can be a couple's most substantial asset.
There is typically a significant gap in pension wealth between couples, with one party, often the man, holding the bulk of the pension wealth.
Women commonly lose out on pensions in divorce as they tend to omit them from discussions, unaware of their importance.
Neglecting pensions in divorce talks could cost women an average of £77k in today’s money upon retirement.
The gender pensions gap, with a 56% difference in average pension assets favouring men, is as serious as the gender pay gap.
Couples opting for a DIY divorce are more vulnerable as they may overlook the value of their pensions and long-term financial needs.
Only 12% of financial orders in divorce include a pension sharing order, with parties often prioritising the family home over pension claims.
This decision can jeopardise the financial security of the party, usually the wife, by sacrificing long-term income for short-term stability.
Women's longer life expectancy necessitates a more substantial retirement fund to sustain annual income post-retirement.
Options for Handling Pensions in Divorce:
Pensions should be part of financial disclosure in the early stages of divorce proceedings to assess assets and disparities.
When discussing pensions, couples have two primary options: pension sharing and pension offsetting.
Pension sharing involves one party receiving a share of their ex-spouse’s pension, while pension offsetting entails receiving a greater share of another asset, like the family home.
Opting for pension offsetting may compromise long-term stability for short-term gains.
Seeking advice from a legal professional and a financial adviser is crucial to navigate pension-related decisions and secure a court order for legal protection.
“It’s sad, something coming to an end. It cracks you open, in a way—cracks you open to feeling. When you try to avoid the pain, it creates greater pain,”. – Jennifer Anniston
Your Next Steps:
Seeking guidance from a family solicitor, especially those well-versed in pensions, is essential.
Financial advisers can provide expert advice on managing finances and future income post-divorce.
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